The Government introduced the Treasury Laws Amendment (Junior Minerals Exploration Incentive) Bill 2017 on Thur 19.10.2017.
It proposes to amend the tax law to replace the former Exploration Development Incentive (EDI) with the Junior Minerals Exploration Incentive (JMEI). Like the EDI, the JMEI would provide a tax incentive to invest in small minerals exploration companies undertaking greenfields minerals exploration in Australia. Australian resident investors of these companies would receive a tax incentive where the companies choose to give up a portion of their tax losses relating to their exploration expenditure in an income year.
Unlike the EDI, under the JMEI:
- eligibility for the incentive would be limited to investors that purchase newly issued shares; and
- the incentive would be allocated between eligible exploration companies on a first come, first served process (subject to integrity requirements).
There are 3 main components of the JMEI:
- The amendments would establish a framework for eligible companies to give up a portion of their tax losses attributable to greenfields minerals exploration to create and issue exploration credits to investors where they have received an allocation of credits from the Commissioner.
- The amendments would entitle an entity that invests in a greenfields minerals explorer and receives an exploration credit to either a refundable tax offset (the JMEI tax offset) or (for corporate tax entities other than in some cases life insurance companies) an additional franking credit.
- The amendments would extend the application of the excess exploration credit tax rules.
The total value of the tax incentives available to taxpayers in respect of acquisition of eligible shares in an income year would be restricted to $15 million in 2017-18, $25 million for 2018-19, $30 million for 2019-20 and $30 million for 2020-21. If part of the cap is unallocated, it would be carried over to a subsequent income year for which allocations can be made. To ensure that the benefits of the incentive are widely distributed, there will be a cap on the amount of credits that may be allocated to an entity of 5% of the total amount available for each year. The incentive will not be available for shares issued or expenditure incurred in income years after the 2020-21 income year.
DATE OF EFFECT: The JMEI would apply to expenditure incurred in the 2017-18, 2018-19, 2019-20 and 2020-21 income years.
[APH website: Bills Digest, Bill, Explanatory Memorandum to the Bill; LTN 200, 19/10/17]